The Essential Eight

In this post, we identify the source of ambiguity and provide an overview of FONOPs and what distinguishes them from the routine practice of freedom of navigation. We then explain why confusing the two is problematic—and particularly problematic in the Spratlys, where the practice of free navigation is vastly preferable to the reactive FONOP…

The routine operations of the fleet in the Pacific theater illustrate the crucial—and often misunderstood—difference between a formal FONOP and operations that exercise freedoms of navigation. FONOPs are not the sole remedy to various unlawful restrictions on navigational rights across the globe, but are instead a small part of a comprehensive effort to uphold navigational freedoms by practicing them routinely. That consistent practice of free navigation, not the reactive FONOP, is the policy best suited to respond to Chinese assertiveness in the SCS. This is especially true in areas such as the Spratly Islands where China has made no actual legal claims to challenge.

The U.S. military confirmed a military exercise by Air Force B-1B Lancer bombers over the South China Sea Thursday, a move that prompted Beijing, which illegally claims most of the sea, to remind Washington that it remains “vigilant” before U.S. exercises.

Eyebrows were raised in diplomatic circles after Xi held bilateral meetings with several leaders including Prime Minister Modi, but not with Sharif, in Astana, where the entry of India and Pakistan into the SCO was formalised.

The day after the Islamic State claim, state-controlled tabloid Global Times published a report that suggested the attack could be related to the work of a Korean-led missionary group, using the sensationalist headline (link in Chinese) “Scoop! The truth behind the kidnapped Chinese people in Pakistan: Sure enough it’s Korean peoples’ fault again.” The article noted that Korea’s Christian aid workers have been kidnapped and killed overseas in the past.

Xi’s vision is impressive, but will it succeed as a grand strategy? China is betting on an old geopolitical proposition. A century ago, the British geopolitical theorist Halford Mackinder argued that whoever controlled the world island of Eurasia would control the world. American strategy, in contrast, has long favored the geopolitical insights of the nineteenth-century admiral Alfred Mahan, who emphasized sea power and the rimlands.

At World War II’s end, George F. Kennan adapted Mahan’s approach to develop his Cold War strategy of containment of the Soviet Union, arguing that if the US allied with the islands of Britain and Japan and the peninsula of Western Europe at the two ends of Eurasia, the US could create a balance of global power that would be favorable to American interests. The Pentagon and State Department are still organized along these lines, with scant attention paid to Central Asia.

Ning Yanling, the head of the inspection team, said the internet regulator had “for a period not carried out general secretary Xi Jinping’s important instructions and requirements resolutely and promptly enough”, according to a statement on the website of the Central Commission for Discipline Inspection.

It was also criticised for lacking “a sense of political responsibility” and failing to implement the central leadership’s major decisions and policies on cyberspace in a satisfying manner.

Comment: The report from the CCDI site 中央第八巡视组向中央网络安全和信息化领导小组办公室反馈“机动式”巡视情况, no word on the fate of the former CAC head Lu Wei, long-rumored to have all sorts of discipline problems, along with a taste for good champagne

Internet companies such as Weibo, China’s equivalent of Twitter, and Sequoia Capital-backed news app Toutiao were summoned by the Beijing division of CAC last week and told to close social media accounts owned by paparazzi reporters and groups.

“Entertainment circles shouldn’t be confused with gossip circles,” People’s Daily said in an editorial on Thursday

“This is unlikely to be the end of it,” Ge said. “Ubiquitously shared content mongering health advice or ill-based stock and investment tips may be next in line,” he added.

Comment: Hearing this may be the start of rollout of much harsher information controls as we head into the 19th Party Congress.

“I thought without freedom of expression you can’t innovate. I thought with censorship you’d always be confused what product you can do. I thought American companies would be successful if it weren’t for Chinese protectionism,” ran his list. “I thought Chinese people would really want to see American websites if they could.” While censorship, protectionism and copying are often the first things that many foreigners associate with Chinese tech—and they’re undoubtedly important factors—thinking beyond them is vital to understanding the Chinese internet.

Comment: A good refutation of one of the dumber assumptions I hear frequently about the Chinese Internet. From the perspective of a Chinese Communist Internet (ChiComNet) regulator the policies policies are generally working great but are still a bit too loose…

ThePRC keeps building a case against Guo, unlikely though anything they produce about violations of PRC law will lead US officials to kick Guo out or hand him to Beijing, more effective may be the attempts to show US authorities that Guo has broken US law. And might be Guo in some financial difficulty?

Fugitive businessman Guo Wengui paid an anti-corruption official nearly 6 million yuan ($880,000) in bribes for favors that included helping gain control of a private company from which Guo made about 400 million yuan, according to a newly disclosed court document.

The midranking official was Meng Huiqing, who was at the Central Commission for Discipline Inspection (CCDI), the powerful anti-graft watchdog under the ruling Communist Party.

Sources from Dalian’s judiciary system told Caixin that prosecutors are investigating a series of suspicious bribery, embezzlement and fraud cases involving Guo and his companies. The court prosecution summary said Guo himself would be dealt with “in separate cases.”

In a letter to the Broadcasting Board of Governors, the four out of five journalists being investigated alleged that one of the outside investigators hired by the agency, whom they describe as a “pro-China businessman,” “brought his own son and a Chinese assistant (Chinese citizen…) to the interview sessions.” “They are provided with our personal information, including our real names and personal background,” the four VOA journalists wrote. (One of the five journalists is reported to be suffering from an illness.)

“Such ‘unmask’ of VOA journalists with Chinese origin, who normally use pennames at work for security reasons, is highly irregular and retaliatory,” the four VOA Mandarin Service journalists also wrote in their letter to the BBG Board.

Comment: Who is the “outside investigator”?

More Revelations of PRC Influence in Australia</

The revelations of PRC influence in Australian politics keep coming, and there is little reason to believe what we are seeing is any more than the tip of the iceberg. Here is an age test for Sinocism readers: Who remembers Liu Chaoying, Liu Huaqing’s daughter who got caught up in the PRC meddling in the 1996 US Presidential election? It is worth noting that the PRC is a lot richer, more sophisticated and influential now than in the mid-90s…

Perhaps the strangest thing in the Helen Liu saga was the statement released by Australia’s top counter-espionage agency, ASIO, a day after the initial story about her broke in late March 2009.

Kevin Rudd’s Labor government was already having problems on the China front. The Mandarin-speaking Rudd had just been criticised after he “secretly” hosted the Chinese Communist Party’s propaganda chief at the Lodge. Before that, Rudd and other Labor MPs were in the gun over a series of trips they made – and declared appropriately – to China paid for by Chinese entrepreneur and political donor Ian Tang.

“Beneath the radar, Australian universities are helping give China the technological leadership” in advanced military and ­industrial technology “it craves”, the researchers say.

The work, published in The Weekend Australian ($$) today, is from Clive Hamilton, holder of the vice-chancellor’s chair in public ethics at Charles Sturt University, who is writing a book on Chinese influence in Australia, and Australian National University student Alex Joske, who has written several reports on the issue.

New Report on PRC-North Korea Trading Links, Threats Of New US Sanctions on PRC Firms

Several Chinese entities of concern are identified in a report to be released Monday (Risky Business: A System-Level Analysis of the North Korean Proliferation Financing System) by a Washington-based nonpartisan research group, C4ADS, which works to expose illicit trading networks. Those identified in the report include a Chinese businessman and his sister said to be connected to a ship intercepted by Egypt last year while smuggling 30,000 North Korean rocket-propelled grenades.

U.S. officials say the report reflects part of its strategy towards North Korea.

Shanghai’s government had no official response to Saturday’s protest. In ​a statement released​ late​ Monday, ​a local housing bureau​ ​suggested a softening of policies applied to developers and buyers, though it stopped short of explicitly saying commercially-zoned units could be permitted for use as residences

Related: 上海:清理商住房针对违法违规房企 维护购房人权益_网易新闻Comment: Shanghai government already backtracking, says responsibility of the developers, will ensure buyers’ rights protected. The reality is that this was a failure of officials to properly regulate. Wonder if this is big enough to cause any issues for Han Zheng

Economic Watch: China’s central bank treads carefully on competing goals – Xinhua The Financial News, a central bank-affiliated newspaper, ran an editorial Saturday, saying a credit crunch is highly unlikely as the overall liquidity condition in the banking system remained stable. Authorities have already made moves ahead of the expected Fed rate increase, while the MPA, a formal evaluation covering loans and other assets, together with the ongoing financial scrutiny, will actually help stem financial risk, said the newspaper. “There is no need to exaggerate the liquidity risk.”

China unlikely to see repeat of 2013 market turbulence-Reuters The newspaper, which is affiliated with the People’s Bank of China (PBOC), said it was not unusual for some banks to hike their deposit rates to adjust the rate of return on some financial products. “There’s nothing to fuss about,” said the newspaper, adding that the central bank had improved its risk control mechanisms and urged that market players should adopt a rational approach to mid-year liquidity conditions. 客观认识理性对待年中流动性风险

Local Governments Relax Policy on Builders’ Side Agreements – Caixin Several local governments have begun allowing some leeway in a popular practice among builders who compensate for their profit shortfalls through so-called decoration contracts, which have been the target of recent crackdowns… “This feels more like a compromise from local governments,” a real-estate insider who requested anonymity told Caixin. “The price capping cannot contain real market prices. They had to give way to the developers’ approach and then started to regulate it. After all, the prices reflected in online signing data will not be affected.”

China accuses 2 more provinces of faking data – FT $$ Data were falsified by “some regions” or companies in coal-rich Inner Mongolia as well as Jilin province, in the country’s grain heartland, the Central Committee for Discipline Inspection said in a critique of malfeasance by local officials in the two provinces. It did not provide details or a timeframe.

China-backed fund in third bid for U.S. to approve chip deal – sources | ReutersComment: Third time should not be the charm, CFIUS should block // Canyon Bridge has been seeking to convince CFIUS that it will run Lattice without influence from the Chinese state, the sources said. Several U.S. lawmakers expressed concerns about the deal after Reuters reported last year that Canyon Bridge is funded by cash originating from China’s central government, and also has indirect links to its space program. Few deals have ever filed for CFIUS review three times

China Rail Freight Sees Booming 2017 After Five Years of Contractions – Caixin The end of the five-year decline in volume comes as China’s economy slows and development in other means of transportation has squeezed the railway market. A person from CRC told Caixin earlier that the progress has been a combined result of the operator’s improvement in providing freight service, the country’s efforts in supply-side reform within industries including coal and steel that rely on rail freight, and a recent government campaign restricting road transport from carrying coal amid air pollution.

China Cools IPO Flow to Mixed Fanfare – Caixin The CSRC said Friday that as of mid-May, nearly 70 applications were rejected on the grounds of corporate-governance issues. That translates to an approval rate of 73%, down from 92% in 2016, it said. The regulator’s concerns on the rejected applications include suspicious accounting practices and murky connected transactions.

Shenzhen Metro to Become Largest Shareholder of Vanke – Caixin Evergrande had been approached by the Shenzhen government to withdraw from the bidding for Vanke. In return, Evergrande, which is already a Hong Kong-listed company, would be allowed to make a second listing on the Shenzhen stock exchange through a “backdoor listing.”

高盛董事长兼CEO贝兰克梵：中国是世界上最稳定的国家_第一财经Comment: Goldman CEO Blankfein tells PRC media that china may be the most stable country in the world? // 近日，贝兰克梵在北京接受了包括第一财经在内的媒体采访。他认为，历史上来看，当下的世界仍然是前所未有的很好的状态，而中国可能是世界上最稳定的国家。

PLA schools to expand recruitment, help China win information war – ECNS Eight new military-affiliated academies will start recruiting high school graduates this fall for the first time following the launch of military academy reforms in 2016, which experts said would help China win the information war. The eight new academies merged with other universities and academies, with six belonging to the People’s Liberation Army (PLA) ground force, the Legal Mirror reported.

The U.S. Is Losing the Pacific to China – WSJ While China woos the Pacific islands with diplomacy and investment, there is little evidence America is putting any significant resources into the region…Unless Washington starts in earnest to engage the Pacific islands—vital bases during World War II—its lack of investment, diplomacy and financial inclusion will inevitably see the region swing to China. The U.S. will have ceded the entire board, one piece of the Pacific at a time.

China and Saudi Arabia have seduced Trump into being their sweetheart – The Washington Post Editorial No doubt the Chinese and Saudis are shrewd enough to know their current luck may not last. When China fails to rein in North Korea, or the Saudis fail to deliver the Palestinians for a Mideast peace deal, Trump may suddenly turn on them. For now, though, they have illuminated an embarrassing and somewhat scary truth about this president: When it comes to foreign affairs, he is heedless of history, susceptible to blandishments and supremely gullible.

China, Singapore Vow Trade Cooperation in Sign of Thaw – Bloomberg Chinese Foreign Minister Wang Yi and Singaporean counterpart Vivian Balakrishnan said Monday in a briefing in Beijing they reached agreement to work more closely on China’s “Belt and Road” trade and infrastructure initiative. Balakrishnan described ties as “strong” and said China’s relationship with Southeast Asia was “stable, calm and positive.”

This new ramjet engine could triple the range of Chinese missiles | Popular Science In a May 31 report, the Science and Technology Daily announced that the 4th Research Institute of the China Aerospace Science and Technology Corporation (CASC) has twice successfully tested a ramjet engine aimed to power air-to-air missiles. Song Zhongpin, a former PLA Rocket Force expert, told the Global Times that the engine was hypersonic, which suggests a speed of at least Mach 5, or 3,835 miles per hour.

Thai-US relations back on the move again? | Bangkok Post: opinion When Gen Prayut goes to Washington, he will be following in the footsteps of Vietnamese Prime Minister Nguyen Xuan Phuc, the first Southeast Asian leader to visit President Trump. The Vietnamese visit is instructive for Thailand. It was transactional and trade-focused.

Liu Yunshan urges stronger BRICS cooperation – Xinhua Senior official of the Communist Party of China (CPC) Liu Yunshan on June 11 called on political parties, think tanks and non-governmental organizations in BRICS countries to cement exchanges and boost cooperation within the group

Premier calls on overseas Chinese to join in innovation, economic cooperation – Xinhua Premier Li Keqiang on Monday called on the Chinese diaspora to actively participate in the country’s innovation drive and its economic cooperation with the rest of the world. China’s economy is keeping steady growth with positive outlook and the government has confidence in delivering the annual development goals, Li said while meeting delegates at the second overseas Chinese industrial and commercial congress in Beijing.

Tech And Media

WannaCry cyber attacks not linked to China: experts – Xinhua It is groundless to claim that China is behind the recent ransomware WannaCry attacks that swept across the world, said Zheng Wenbin, chief security engineer of Qihoo 360, a major Internet security company of China recently. The claims were made on the basis of misleading news stories, he added

‘No Such Thing as Justice’ in Fight Over Chemical Pollution in China – The New York Times as the Chinese government has promoted the sector’s rapid growth, it has struggled with its impact on the environment. The chemical industry has quashed calls to strengthen oversight and force companies to publicly disclose what substances they produce. Local environmental bureaus are often politically feeble and understaffed. Even when companies acknowledge some responsibility for harming public health, as Meilun did, the remedies given to communities often fall far short of the victims’ needs.

China to require pollution liability insurance for 8 types of companies – ECNS According to the guideline, eight categories of companies – including those engaged in the extraction of petroleum and natural gas; the gathering, storage, utilization and disposal of hazardous wastes; and the production of active pharmaceutical ingredients – will be required to buy environmental pollution liability insurance.

Food And Travel

China ‘Closes’ Mount Everest, Fall Season Cancelled The government of China controls permits and infrastructure on the north side of Mount Everest. This week China announced it will close the mountain because it “witnessed a series of problems including an illegal north-south traverse by a Polish climber.”

Jobs And Events

China’s Vision for a New Eurasian Order – Carnegie Endowment for International Peace Carnegie is pleased to present a discussion of a new book by NBR’s Nadège Rolland entitled China’s Eurasian Century? Political and Strategic Implications of the Belt and Road Initiative. She examines the drivers and goals of China’s Belt and Road Initiative and argues that the initiative reflects Beijing’s desire to shape Eurasia according to its own worldview and unique characteristics. Rolland will present her findings, with Ely Ratner and Daniel S. Markey providing comments. Carnegie’s Ashley J. Tellis will moderate.